Why Most Traders Like To Go Against The Trend?

It would be really good if there was a way to enter the market right when it started going up, and get out right when it reverses. Many novice traders think that they have to trade like that, otherwise they can not be called a trader. It is not their fault in most cases. They just don’t know they are wrong. This mistake is what they learn from some trading courses, videos, sites, and… . One day I attended a seminar. The instructor showed a slide like this, and explained that he could teach the students to buy/sell whenever the market went up and down:

This is so encouraging to novice traders. When they see such a screenshot, they refer to some price charts and calculate the money they can potentially make, and they get excited. The first thing they do is opening a live account, trying to copy the same strategy they have learned from the seminar, but unfortunately what they get is a wiped out account. Many of them don’t get disappointed and reload their accounts trying to do the same, but they fail again.

Trying to hit the top and bottom of the markets becomes a habit in them from the first day they start trading, and this is because of nothing but a bad instructor who is not a trader himself. This habit causes them to go against the trend while it is still strong, because they take any reversal signal, even the weak ones, to enter the markets at the beginning of a possible new movement.

It is very easy to figure out where to buy and sell when you look at the back data. But when you want to apply it to the live market, you fail. Each time you think it is time to enter because the market wants to reverse, it keeps on moving toward the same direction.

It would be really good if we could hit the top and bottom of the markets. Who hates to make money every time that the price goes up and down? Those who try to do that and be among the first who buy when the price starts going up, are not aware of the power of trends, specially when it comes to trading. A trend doesn’t reverse so easily in the markets.

In any market, price can go up and down a lot, but it doesn’t mean that we should make money through each and every ups and downs the markets make. Trading is not about buying low and selling high, and selling high and buying low. In most cases, we have to buy high and sell higher, and sell low and buy lower. Those who try to go against the trends, are greedy and they are eager to hit the top and bottom of all the markets movements, but this is impossible.

It is the market that has to tell you when it wants to reverse, and when it wants to continue the trend. Then you can decide whether you go for the continuation signal and ride the trend, or take the advantage of the reversal signal.

There are so many cases that the price changes its direction and moves toward the opposite direction very strongly while it doesn’t form any visible and distinguishable reversal signal. Naturally, we can not be in and we have to sit and watch the strong movement while we are out. This is normal, and happens a lot in trading. Markets are not supposed to form strong signals any time they want to continue the trends or reverse. It is the trader’s job to watch the markets, and wait for a strong signal to form. If a market forms a strong signal, we get in. If not, we have to be out.

Most traders have a wrong impression about trading. Trading is not what most traders think. One day a friend emailed and said that while I was waiting for a strong trade setup to form on the daily chart, he joined a signal service, took several positions and banked thousands of dollars. I replied his email and told him that I would email him again after a few months to see how his trading was. Two months later I emailed and asked him whether he was still doing good with that signal service or not. He replied that he wiped out his account the same month that he emailed me.

If I had warned him about the risks he was taking, he would not believe me, because at that time he was so proud of the profit he was making, and he underestimated my knowledge and years of experience in trading so many different markets. Therefore, I decided to let him learn the lesson the hard way, so that he would never forget it.

You have a wrong impression about trading, if you think:

Trading is a get-rich-quick program.

You have to make money through all the price ups and downs.

You can hit the top and bottom of the trends.

You should take at least one position any time you sit at the computer to analyze the charts.

You should open a live account as soon as you learn the basics and a trading system.

Hi Chris, I hope you had a good flight to China 😉
Thank you for another great article. I like one rule: trend is your friend 😀
I hope our GBPCAD position go to uptrend too, because on daily chart it looks like sideway market, what do you think? Thank you

Very surprise that you take so much PASSION is doing all this free of charge. God only will reward you for finding time out of no time you have to do this to help somebody like me. Can’t imagine how long you dedicate out of your time to write, type and and do all the analyses each day….. Lest I forget, not even a single of your followers here pay a penny for the maintenance of this your website! God bless you sire. Can’t wait to meet you face to face someday but until then, must keep learning from you as fast/much as I can.

Chris. You have explained me in more than one article already. And everytime you do, I gain more respect (as if I didnt have enough respect already) for your trading capabilities.
I have been that sort of trader. The sort that thinks we want to get in before a trade has been confirmed just so you wont miss a few pips of profit. its the worst and most stupid thing that any trader can do…………..it really sucks that some of us must always learn the hard way but thats what it takes to be convinced.
Again, I really appreciate your work here. And I also know what a blessing it can be to help others with out asking anything in return…………..your a good man. And I agree with Lekan, I would love to meet you one day and shake hands with the guy that helps people he doesnt even know….They are few and far between in this day and age.

Thank you very much for your great post again!
NZD/USD is forming the second continuation setup today. They don’t look strong enough for me, and anyway, middle band is a tricky area. What do you think?

Chris Hope your trip is going well mate !. Thank you for another great article . A few ”home truths” hit home there especially fighting the trend ! . Its a long road but thankfully we are all on the correct path thanks to you. Good luck to all this week in this addictive ” ” !

Hi Chris, i got 1 question about usdjpy and gbpusd. I read some article in a forum about their relation. Can we trade base the relation? For example if there are good strong buy set up form on usdjpy we can sell on gbpusd at same time.

My stop loss was triggered when the next candlestick bounced up. However, as the trade setup was too strong, I entered immediately. That is why my entry level is higher than the 2014.09.07 candlestick close.

No, I don’t wait for the next candlestick to bounce up. I enter at the open of the next candlestick.

Good call Chris on USDCAD – I’m sure I commented and agreed with you on 10/6 😉
I have to say, I’m really having fun following your methods – I have never seen such a solid approach, and I’ve spent years and many thousands of dollars. And the remarkable thing is – you are doing it all in real time, not the ‘retrospective’ commentaries that all the other ‘gurus’ do.

Let’s see if a strong bearish setup happens with the forming “W” pattern on USDCAD, right? 🙂

If for example I spot a short trade signal on daily chart, then on 4H and 1H chart the price finally breaks the support line, should I go short right away or should I wait for the price to retest the line? If I have to wait for it to retest the line, what if I missed the chance instead? What do you think? Thanks a lot

Conservative traders wait for retesting. If the price doesn’t retest, then they will miss the chance and have to wait for another setup. It is the trader’s choice whether he wants to wait for retesting or take the position right when the breakout forms. It is a personal decision.